Correlation Between Golden Grail and Hello

Can any of the company-specific risk be diversified away by investing in both Golden Grail and Hello at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Golden Grail and Hello into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Golden Grail Technology and Hello Group, you can compare the effects of market volatilities on Golden Grail and Hello and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Golden Grail with a short position of Hello. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Grail and Hello.

Diversification Opportunities for Golden Grail and Hello

0.35

Correlation Coefficient

Golden Grail  Hello

Weak diversification

The 3 months correlation between Golden and Hello is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Golden Grail Technology and Hello Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hello Group and Golden Grail is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Golden Grail Technology are associated (or correlated) with Hello. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hello Group has no effect on the direction of Golden Grail i.e., Golden Grail and Hello go up and down completely randomly.

Pair Corralation between Golden Grail and Hello

Given the investment horizon of 90 days Golden Grail Technology is expected to generate 3.77 times more return on investment than Hello. However, Golden Grail is 3.77 times more volatile than Hello Group. It trades about -0.01 of its potential returns per unit of risk. Hello Group is currently generating about -0.06 per unit of risk. If you would invest  3.05  in Golden Grail Technology on December 27, 2024 and sell it today you would lose (0.94) from holding Golden Grail Technology or give up 30.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Golden Grail Technology  vs.  Hello Group

Golden Grail Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golden Grail Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Golden Grail is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hello Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hello Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Golden Grail and Hello

The main advantage of trading using opposite Golden Grail and Hello positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Grail position performs unexpectedly, Hello can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Hello will offset losses from the drop in Hello's long position.

The idea behind Golden Grail Technology and Hello Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.